05/28/2019

Dont Pay Full Price For Wine

Why You Should Never Pay Full Price For A Bottle Of Wine At The Winery

Selling wine at full retail is the key to a winery's healthy bottom line. Because of the huge markup in wine, there is no reason why some discount shouldn't be passed on to you at the register.  Usually all it takes to get that discount is to ask.

The big markup occurs for a few reasons. One is obvious: A winery sells their wines for a hefty profit because they can. Perception, Prestige, Packaging all can increase the price, but a winery charges according to its business model. A cult winery charges cult prices, a boutique winery charges boutique prices, and a warehouse winery charges warehouse prices (well not really). 

A hilarious article on the breakdown of a $100 bottle of wine can be found here but the real figures on the left side of the article are eye popping. Basically the three biggest cost components of a bottle of wine are Grapes, Overhead, and Employees. This is coming from a winery located in the prestigious Geyersville area of California. Those three items contribute to 70% of the bottle of wine's total cost.



Another reason there is a big markup in that bottle is because of the Three Tier System for alcohol distribution; the three tiers being wineries, distributors, and retailers with a typical 30% markup between every tier. 

For example if you see a wine selling for $20 at the grocery store, the store has a 30% markup in it. This means they purchased the bottle for about $15 from the distributor. The distributor has their markup in there which means they purchased it from the winery for about $11. If you add one more step you would conclude that the winery's cost should therefore be at the very most $8 to produce that $20 bottle.

Remember that trip you took to the winery? Let's look at the winery's bottle cost again in a new light. At the winery you have found the same $20 bottle at the grocery store. Because you have gone to the source the bottle will be cheaper right? Wrong! Many times and especially for the winery's online store, the bottle will be MORE expensive. You see, if a winery undercuts its retailers, the retailers have no incentive to carry the wines. If the retailers aren't buying from the distributor, then the distributor has no incentive either. So really it is in the winery's best interest to sell a bottle at the winery at a huge markup.

You now know there is a healthy margin when you are buying at the winery. In my experience the best way to get a nice discount is to buy more than one bottle. I like to know my discount before I pick out my wines. Don't ask "if there is a discount" for a multiple bottle purchase, ask "what is the discount" for a multiple bottle purchase. If you plan on making a bigger purchase, ask what is the discount for a case purchase. Heck, if you are buying a case, you must really like the wines and should consider joining the winery's wine club. To explore many more wines at wholesale prices, try out Cellars Wine Club.